Correlation Between DAmico International and EuroDry

Can any of the company-specific risk be diversified away by investing in both DAmico International and EuroDry at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining DAmico International and EuroDry into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between dAmico International Shipping and EuroDry, you can compare the effects of market volatilities on DAmico International and EuroDry and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in DAmico International with a short position of EuroDry. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAmico International and EuroDry.

Diversification Opportunities for DAmico International and EuroDry

0.92

Correlation Coefficient

DAmico International  EuroDry

Almost no diversification

The 3 months correlation between DAmico and EuroDry is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding dAmico International Shipping and EuroDry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EuroDry and DAmico International is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on dAmico International Shipping are associated (or correlated) with EuroDry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EuroDry has no effect on the direction of DAmico International i.e., DAmico International and EuroDry go up and down completely randomly.

Pair Corralation between DAmico International and EuroDry

Assuming the 90 days horizon dAmico International Shipping is expected to generate 0.63 times more return on investment than EuroDry. However, dAmico International Shipping is 1.59 times less risky than EuroDry. It trades about 0.15 of its potential returns per unit of risk. EuroDry is currently generating about -0.26 per unit of risk. If you would invest  442.00  in dAmico International Shipping on October 13, 2024 and sell it today you would earn a total of  28.00  from holding dAmico International Shipping or generate 6.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	90.48%
Values	Daily Returns

dAmico International Shipping  vs.  EuroDry

dAmico International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days dAmico International Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

EuroDry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EuroDry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with DAmico International and EuroDry

The main advantage of trading using opposite DAmico International and EuroDry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAmico International position performs unexpectedly, EuroDry can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in EuroDry will offset losses from the drop in EuroDry's long position.

The idea behind dAmico International Shipping and EuroDry pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.